Tuesday, November 03, 2020

Wouldn't it be better if the whole country is competitive?

 "India's factory activity expanded at its fastest pace in over a decade in October as demand and output continue to recover strongly from coronavirus related disruptions, but firms cut more jobs, a private survey showed." "The Nikkei Manufacturing Purchasing Managers' Index INPMI=ECI, compiled by IHS Markit, rose to 58.9 in October from September's 56.8." "But firms cut staff for the seventh month in a row, a streak not witnessed since the survey began in 2005, signaling a quick recovery in the consumer-driven economy may be a distant possibility." A survey conducted by the National Council for Applied Economic Research (NCAER) showed that "Business Confidence Index (BCI) rose to 65.5 in the second quarter after recording a massive drop to 46.4 in the first quarter of the ongoing fiscal". "India's unemployment rate rose in October to 6.98% from 6.67% in September, according to data released by the Centre for Monitoring Indian Economy (CMIE)." "Rural unemployment climbed to 6.9% in October against 5.86% in September," while "urban unemployment was down from 8.45% in September to 7.15% in October". As per the Department of Agriculture, "The government has pegged a record production of foodgrains at 144.52 million tonnes in the ongoing Kharif season". If manufacturing production, business confidence and harvest of cereals is going up why is employment falling? Strange. "When I speak to industry, they clearly say there is a lot of reset in industry from the point of view of running businesses with less than more -- less capital, manpower, effort and certain inputs. Industry is realising competitiveness is a strong message," said Finance Minister Nirmala Sitharaman. It means companies are not thinking of increasing capacity, new investment or employing more people. "Half of all work tasks will be handled by machines by 2025 in a shift likely to worsen inequality, a World Economic Forum report has forecast." "The pandemic has pushed many slum families into persistent poverty," wrote Prof A Krishna and E Rains. "Having exhausted their savings, piled on debt at ever-higher interest rates, and mortgaged or sold their meager assets, slum families are finding it hard to cope." Instead of providing relief to citizens the government is thinking of increasing taxes on fuel which will increase cost of personal transport and all goods transported by road. Petrol prices are around $2 per gallon in the US, which works out to around Rs 48 per liter whereas prices are over Rs 80 per liter in India already. If the country is not competitive, companies have to be. Which means fewer jobs.         

No comments: